Airlines being sued in Brazil due to the outsourcing of services21/07/2014
Virtually all international airlines that fly to Brazil have been – as from the past 2 or 3 years – approached by Labor Public Attorneys (LPAs) of various jurisdictions and offered to sign Consent Decrees committing themselves to in-source their third party contractors’ employees who provide air transportation ancillary services including ticket sales, check-in, baggage check-in, search for lost baggage, embarkation and disembarkation control, etc.
The vast majority of the airlines have refused to sign such Consent Decree and, as a consequence, the LPAs have filed the so called Public Civil Actions (Ações Civis Públicas – ACPs) against them aiming at prohibiting the airlines from hiring third party contractors to provide these ancillary services.
Under Brazilian labor case law the ancillary services are highly likely to be considered “core business activities” and, as such, cannot be outsourced, that is, cannot be contracted to third parties. What Labor Courts are mainly concerned about when it comes to outsourcing is that contractor employees have lower benefits than airlines’ employees. The airlines chances of winning the ACPs increase significantly in case they prove that their third party contractors’ employees enjoy similar benefits, i,e, follow the airline employees’ Collective Bargaining Agreement, report directly to their real employers (the contractor), the Brazilian Civil Aviation Agency (IATA) regulates ancillary air transportation services, that ancillary transportation services are specialized services, which require specific training, and that the airline core business activity is the transportation services.
Another important argument on behalf of the airlines is that the Brazilian Constitution expressly states that “no one can be obliged to do or not to do something expect in light of [statutory] law”. Since the prohibition to outsource core business activities arises from case law such prohibition may be challenged before the Brazilian Supreme Court (STF). Incidentally, the STF is currently hearing a case under which a cellulose company that outsources the planting, cutting and transportation of eucalyptus wood for the production of cellulose is challenging the prohibition to outsource imposed by a decision issued by the Brazilian Superior Labor Court (TST).
There is a lot of spotlight in the STF decision since it will have a binding effect in any other cases discussing the same issue which ultimately is whether Brazilian labor courts can regulate outsourcing despite the absence of [statutory] law either prohibiting or allowing it.